Now that we've all had a little time to sit back and think about what happened at Betfair today, here's why I think it was entirely the right decision for them to void all bets. I did not have a financial interest in the race, and like it says up in the top corner, I am an ex-Betfair employee - but I hope neither have any bearing on my position on this.
The punter's biggest lament with bookies is when they cry 'palpable error'. Having worked both sides of the counter, on the whole, I don't have a problem with this rule - when there is no doubt an error has been made, by whatever reason. Do unto others as they would have do unto you. I have no sympathy at all for punters bitching and moaning on forums when they identified an obvious mistake with a bookmaker, and tried to put their life savings on it. Those guys have the moral code of John Terry or Ryan Giggs, and some might say the gene pool would be better off without them. When it does hit very thin ice is when bookies roll out the palpable error rule when it isn't blatant - when a reasonable person would struggle to differentiate between the right and wrong offers. Online bookies in offshore havens such as Malta or the Caribbean have been known to do this, and put a blight on the industry worldwide. The punter's comeback will be that they have no form of a comeback if they make a mistake - which is untrue. Every betting firm allows the customer to confirm their bet - it's there for a reason. Betfair (and other exchanges) are the only companies I know that allows the punter to switch off this confirmation - but that is not the default setting - if you switch off the option to confirm all bets, then you are stuck with what you enter.
There is no doubt whatsoever that this was a technical glitch of the highest magnitude. Occasionally you see lumpy bets with some joker trying to spoof the market, but nothing of this price or size. This offer was so big, it barely fit on the screen for most people. And the race comments from AtTheRaces tell us that the price was always way out of line as well:
held up towards rear, headway into 3rd before 3 out, travelled best to challenge entering straight, soon led and shaken up to assert before last, kept on well run-in, comfortably
Now it's drawing a long bow to suggest everyone would recognise it was a wrong price, after all, with no bookmakers with automated systems betting in-running, there is no 'right' price - it all comes down to opinions of individual punters. But, this wasn't a 10/1 shot, it was the second favourite which started at a Betfair SP of 2.96. For it to hit 29, it would need to be hard-ridden early and going backwards, with the favourite looking very strong.
In combination with the eight-digit offer, so big that the price never moved despite Voler la Vedette winning by 4 3/4 lengths, even a first-day novice would realise something was seriously wrong in the market.
Betfair's biggest problem in all of this is that the firm, in the UK at least, have sunk to an all-time low in popularity. Everything they do is seen as part of an agenda to screw punters for every penny they can get. Sure, as a start-up evolves into a multi-national corporation, then its values have to change - but it is the relationship with its customers which has faded severely: once regarded as welcome friends joining a cause against those 'evil' bookies, now seen as numbers with wallets which should be drained as efficiently as possible. Back in the old days (circa 2005), a site outage during a key period would result in compensation for everyone, such as a commission-free day. When was the last time you can recall a commission-free market? Such offers these days might cost a lot more... but so is a PR disaster like this one. It was pointed out that the company value of Betfair lost more than the £23m in question between 1400 and 1630 when the stock market closed today. Tech glitches which cause bets to be repeated, or you don't know if they have been matched for several minutes, races not being turned in-play on time, site going down at crucial times.... these are all major issues which piss punters off big time, and it's not as if they are unique. Compensating customers might be costly - but hiding behind the Ts&Cs every time really kills the trust factor from punters. (Yes they often will compensate individuals who complain, but it often seems quite selective on when and to whom).
Cynics will point to this scandal as being an 'obvious' sign that Betfair are trading in their own markets. I don't see that at all. Yes, there is a cross-matching bot involved, that is stated in the market rules, but it could have been any account with a bot (trading programme) which went haywire. To me (a non-techie with a reasonable knowledge of how the system worked a few years ago), it looks as if the liability cap failed in conjunction with the account balance on a single, largely automated, account. You might ask why they both failed - it's possible (in my mind at least) that the liability cap overrides the account balance (if checked elsewhere in the system), in an effort to remove redundant code and reduce transaction time.
Betfair have no bet confirmation option internally, apart from the checks performed on each bet. Of course they can't manually check every bet which goes on the site (nor can a bookie offering 100s of markets in-play) - so the safety net of the option to void has to be there. In an ideal world, that control would be placed in the hands of an independent body - but with financial authorities being shown as being asleep at the wheel before the financial crisis, would that genuinely make us feel any better?
Re why did it take so long to make the void decision if it was so clear-cut? The decision to void bets worth over £20m couldn't be taken lightly, and at this time of year, it is likely that key members of staff weren't in the country, let alone the office. It's not the decision of the graduate in Market Operation to make that decision - senior management would make the call. Also, being a listed company, it was probably deemed necessary/appropriate to wait until after the market closed at 1630 to make the announcement.
To the punters concerned, this void all in-running bets ruling will suck - but let's face it, most of them were well aware of what they were doing - if not initially, then certainly by the end of the race when there was still £20m or so available to back on Voler La Vedette at 29. But if Betfair had enough customers to take all of the offer, leaving someone with a liability of nearly £600m, do they honestly believe forcing them to pay up, effectively sending the company bankrupt, would be the best policy? What if it was another firm which didn't have strict rules on segregating client funds? Would you be happy if a legal challenge forced the company to go bust, taking remaining client funds with it? Thought not. There's no way known a customer would cough up on that debt if it was a technical glitch which caused it, and if it was owned by a billionaire, they'd lock this up in a court case which took years to settle. Remember, if you want all companies to be liable for episodes like this, then expect commission rates/overrounds to increase severely to cover it. You can't have the cake and eat it too.
A legal challenge is expected to be mounted, but I can't see it winning. Betfair might see value in settling out of court, but that would require an attitude change from them.
For Betfair - how do you fix the acidic relationship with customers now?
Invest heavily in solving the tech issues.
Be generous with compensation - no reasonable person expects you to pay the full amount here, but customers and investors need to see you are serious about solving the problems and mending the damaged relationships with customers.
Stop treating your most loyal customers as cashpoints who need to keep paying for the service - if they win, they have to keep paying the premium charge, they shouldn't have to wear avoidable errors through system failures.
Stop trying to be just another bookie - the reason most people joined is because you offered something different.
Put customers before profits for a change - it costs far more to acquire new customers than retain the old ones, if you look after what you have, the profits will take care of themselves.
And as I said in a tweet yesterday - this is about the 17th own goal that Betfair have handed to Betdaq - will they ever cash in on one?
Feel free to make comments below...
UPDATE:
Further Betfair explanations:
In response to a number of customer questions on this matter, we would like to clarify that the account in question has no commercial relationship with Betfair other than being a customer.
Further update to 2pm Leopardstown race
Firstly, we would like to re-iterate that anyone betting in-running in yesterday’s Leopardstown race clearly received a very poor customer service and betting experience. We apologise once again for this.
We have identified the issue and replicated it in a test environment last night. A fix was applied overnight, and is now subject to rigorous testing. A further update on this will be made today.
Contrary to some media speculation, we can confirm that all in-running bets on this market would have been voided, had Voler La Vadette won or lost. There was never any chance of the account in question profiting yesterday. The account in question was also immediately suspended after the Leopardstown race.
There has been some criticism from customers, and in the press, that Betfair took too long to void. Quite simply, we made the decision after we were in full possession of the all the facts and input from the relevant internal departments. A decision was then made to void in accordance with our terms and conditions.
We will update when more information is available.
The punter's biggest lament with bookies is when they cry 'palpable error'. Having worked both sides of the counter, on the whole, I don't have a problem with this rule - when there is no doubt an error has been made, by whatever reason. Do unto others as they would have do unto you. I have no sympathy at all for punters bitching and moaning on forums when they identified an obvious mistake with a bookmaker, and tried to put their life savings on it. Those guys have the moral code of John Terry or Ryan Giggs, and some might say the gene pool would be better off without them. When it does hit very thin ice is when bookies roll out the palpable error rule when it isn't blatant - when a reasonable person would struggle to differentiate between the right and wrong offers. Online bookies in offshore havens such as Malta or the Caribbean have been known to do this, and put a blight on the industry worldwide. The punter's comeback will be that they have no form of a comeback if they make a mistake - which is untrue. Every betting firm allows the customer to confirm their bet - it's there for a reason. Betfair (and other exchanges) are the only companies I know that allows the punter to switch off this confirmation - but that is not the default setting - if you switch off the option to confirm all bets, then you are stuck with what you enter.
There is no doubt whatsoever that this was a technical glitch of the highest magnitude. Occasionally you see lumpy bets with some joker trying to spoof the market, but nothing of this price or size. This offer was so big, it barely fit on the screen for most people. And the race comments from AtTheRaces tell us that the price was always way out of line as well:
held up towards rear, headway into 3rd before 3 out, travelled best to challenge entering straight, soon led and shaken up to assert before last, kept on well run-in, comfortably
Now it's drawing a long bow to suggest everyone would recognise it was a wrong price, after all, with no bookmakers with automated systems betting in-running, there is no 'right' price - it all comes down to opinions of individual punters. But, this wasn't a 10/1 shot, it was the second favourite which started at a Betfair SP of 2.96. For it to hit 29, it would need to be hard-ridden early and going backwards, with the favourite looking very strong.
In combination with the eight-digit offer, so big that the price never moved despite Voler la Vedette winning by 4 3/4 lengths, even a first-day novice would realise something was seriously wrong in the market.
Betfair's biggest problem in all of this is that the firm, in the UK at least, have sunk to an all-time low in popularity. Everything they do is seen as part of an agenda to screw punters for every penny they can get. Sure, as a start-up evolves into a multi-national corporation, then its values have to change - but it is the relationship with its customers which has faded severely: once regarded as welcome friends joining a cause against those 'evil' bookies, now seen as numbers with wallets which should be drained as efficiently as possible. Back in the old days (circa 2005), a site outage during a key period would result in compensation for everyone, such as a commission-free day. When was the last time you can recall a commission-free market? Such offers these days might cost a lot more... but so is a PR disaster like this one. It was pointed out that the company value of Betfair lost more than the £23m in question between 1400 and 1630 when the stock market closed today. Tech glitches which cause bets to be repeated, or you don't know if they have been matched for several minutes, races not being turned in-play on time, site going down at crucial times.... these are all major issues which piss punters off big time, and it's not as if they are unique. Compensating customers might be costly - but hiding behind the Ts&Cs every time really kills the trust factor from punters. (Yes they often will compensate individuals who complain, but it often seems quite selective on when and to whom).
Cynics will point to this scandal as being an 'obvious' sign that Betfair are trading in their own markets. I don't see that at all. Yes, there is a cross-matching bot involved, that is stated in the market rules, but it could have been any account with a bot (trading programme) which went haywire. To me (a non-techie with a reasonable knowledge of how the system worked a few years ago), it looks as if the liability cap failed in conjunction with the account balance on a single, largely automated, account. You might ask why they both failed - it's possible (in my mind at least) that the liability cap overrides the account balance (if checked elsewhere in the system), in an effort to remove redundant code and reduce transaction time.
Betfair have no bet confirmation option internally, apart from the checks performed on each bet. Of course they can't manually check every bet which goes on the site (nor can a bookie offering 100s of markets in-play) - so the safety net of the option to void has to be there. In an ideal world, that control would be placed in the hands of an independent body - but with financial authorities being shown as being asleep at the wheel before the financial crisis, would that genuinely make us feel any better?
Re why did it take so long to make the void decision if it was so clear-cut? The decision to void bets worth over £20m couldn't be taken lightly, and at this time of year, it is likely that key members of staff weren't in the country, let alone the office. It's not the decision of the graduate in Market Operation to make that decision - senior management would make the call. Also, being a listed company, it was probably deemed necessary/appropriate to wait until after the market closed at 1630 to make the announcement.
To the punters concerned, this void all in-running bets ruling will suck - but let's face it, most of them were well aware of what they were doing - if not initially, then certainly by the end of the race when there was still £20m or so available to back on Voler La Vedette at 29. But if Betfair had enough customers to take all of the offer, leaving someone with a liability of nearly £600m, do they honestly believe forcing them to pay up, effectively sending the company bankrupt, would be the best policy? What if it was another firm which didn't have strict rules on segregating client funds? Would you be happy if a legal challenge forced the company to go bust, taking remaining client funds with it? Thought not. There's no way known a customer would cough up on that debt if it was a technical glitch which caused it, and if it was owned by a billionaire, they'd lock this up in a court case which took years to settle. Remember, if you want all companies to be liable for episodes like this, then expect commission rates/overrounds to increase severely to cover it. You can't have the cake and eat it too.
A legal challenge is expected to be mounted, but I can't see it winning. Betfair might see value in settling out of court, but that would require an attitude change from them.
For Betfair - how do you fix the acidic relationship with customers now?
Invest heavily in solving the tech issues.
Be generous with compensation - no reasonable person expects you to pay the full amount here, but customers and investors need to see you are serious about solving the problems and mending the damaged relationships with customers.
Stop treating your most loyal customers as cashpoints who need to keep paying for the service - if they win, they have to keep paying the premium charge, they shouldn't have to wear avoidable errors through system failures.
Stop trying to be just another bookie - the reason most people joined is because you offered something different.
Put customers before profits for a change - it costs far more to acquire new customers than retain the old ones, if you look after what you have, the profits will take care of themselves.
And as I said in a tweet yesterday - this is about the 17th own goal that Betfair have handed to Betdaq - will they ever cash in on one?
Feel free to make comments below...
UPDATE:
Further Betfair explanations:
In response to a number of customer questions on this matter, we would like to clarify that the account in question has no commercial relationship with Betfair other than being a customer.
Further update to 2pm Leopardstown race
Firstly, we would like to re-iterate that anyone betting in-running in yesterday’s Leopardstown race clearly received a very poor customer service and betting experience. We apologise once again for this.
We have identified the issue and replicated it in a test environment last night. A fix was applied overnight, and is now subject to rigorous testing. A further update on this will be made today.
Contrary to some media speculation, we can confirm that all in-running bets on this market would have been voided, had Voler La Vadette won or lost. There was never any chance of the account in question profiting yesterday. The account in question was also immediately suspended after the Leopardstown race.
There has been some criticism from customers, and in the press, that Betfair took too long to void. Quite simply, we made the decision after we were in full possession of the all the facts and input from the relevant internal departments. A decision was then made to void in accordance with our terms and conditions.
We will update when more information is available.
notice you mention 2005 the old days, that was the year my son was born and I got sent a Betfair baby romper suit! I used to recommend them to anyone that I knew that gambled due to the product and customer service.....how times change! If that horse had ended up losing its 1.01 for me they would not of refunded stakes. Exchange with no gimmicks needed please.
ReplyDeleteGreat piece Scott, I'm not going to get into the in's and out's of what happened, it's a bit too technical for me, but I get the gist of what happened and what you are saying.
ReplyDeleteWhat I would like to add to is what your last paragraph said, Betfair seem to me to need to go back to basics, do what worked for them in the first place again.
I think I noticed recently that (correct me if I'm wrong) a new Chief Exec (or whatever the role) by the name of Corbett has been appointed by the company?
I did hope at the time that his remit would be to rebuild the companies reputation by
going back to giving the punter a viable alternative (as you rightly said in your piece) to the bookie, making them an attractive company again by their actions, not by spin.
It's almost a given that the site will experience problems on a Saturday afternoon in some capacity, it's not too much to ask for this to be sorted, or for some kind of compensation for customers in the event off.... instead of the vain tweet on twitter we usually get.
I understand the stock market thing and how important that is, but the point is (and I'm not needed to point this out) that without any customers the share price will only head one way anyway.
As it will if they look after the customers, the share price ultimately is a reflection of how the company performs, if a viable alternative to Betfair enters the market (who knows, it may already be there), then the share price will only head one way on current form.
So my message to Betfair is "lets start looking after the average punter again", it's not too much to ask and if you don't, us punters will start to vote with our feet.
very well said Mr Cricket Betting. Breon Corcoran will be the new CEO, but he's not due to start until August (long gardening leave period before he comes across from Paddy Power). David Yu leaves the post this week, so it's up to chief beancounter (CFO) Steve Morana to run the ship until Corcoran arrives.
ReplyDeleteOne thing's for sure - the highs and lows of Betfair will become a case study for MBA students soon enough.
As much as I agree with the broad thrust of your article, I am not really sure which Ts and Cs allow them to do this. I think the nearest I can find is this...
ReplyDelete"In the interests of maintaining integrity and fairness in the Markets we may, at our sole and absolute discretion, decide to suspend betting on a Market earlier than anticipated by our Rules and Regulations and/or void certain bets or a Market in its entirety."
However, is this "in the interests of maintaining integrity and fairness"? I think it is at least arguable.
Interestingly, the word "technical" is not mentioned in the Ts and Cs and only once mentioned in a different context in the rules and regs. There is no specific provision for technical failures.
Unknown - agree, I couldn't find anything specific which covered this occurrence, but am fairly certain they'll be able to get away with it under a more general clause. Tried reading through them and promptly fell asleep....
ReplyDeleteThe punter would argue 'integrity' means honouring all bets. The lawyer would argue that 'integrity' means the exchange functions as it should, and obviously here it hasn't. One tiny error has created absolute chaos...
Very objective piece here Scott.
ReplyDeleteJust wish Betfair would void my bets when I get the decimal point wrong or back when I meant to lay.
Also if nobody is there to make key decisions during holiday time should they be operating? The stock market does not operate at holiday time.
someone will be there/be on call John during the holidays, but this isn't a normal situation - needed more than just the manager on duty to make the call.
ReplyDeleteI think it must have been an attempt at fraud,
ReplyDeletesurely the instinct when you put up Ugandas GDP as a lay is to cancel it, so if you did not cancel it, you clearly intended to place it. Hence it should be voided with the winners being compensated with any assets of the layer that BF can get to, although I suspect it was planned with very little in an account.
since when has Uganda's GDP been that much? :)
ReplyDeleteAgree Dickie IF the amount was manually entered - that's not been confirmed. However, if the guy was a typical punter with assets well under £1m, is there any value in chasing that for a payout of <5p in the pound (against £23m). Take out legal fees and there will be nothing to share out.
what difference does it it really make to the punter if the decision to void takes 3 hours or 30 minutes?
ReplyDeleteTo unknown, under 13. Miscellaneous (point 3) it says: "Betfair reserves the right to correct any obvious errors and shall take all reasonable steps to ensure markets are administered with integrity and transparency". Think this will cover them against any legal battle.
ReplyDeleteI, like yourself Scott, am a former Betfair employee. Not quite to your heights as only worked in Telephone Betting. Joined in 2009 and was very excited at the time. Then the decision to move from Stevenage to Dublin - this was the time to get out. It felt to me that they were trying to get as far away from their customers as possible. There are probably many customers in Ireland, but surely their UK customers make up the vast majority, so why move out of UK? Great article and insight as ever, many thanks, Aaron
Very good article. Ditto the BetAngel post.
ReplyDeleteOne thing: "When was the last time you can recall a commission-free market?"
I think it was in March:
https://promotions.betfair.com/refund-offer
Cheltenham Festival: Arkle Chase (2.05pm), Win and Place Markets, (Ante post bets do not count).
Champions League: Bayern Munich vs. Inter Milan, All Markets
Champions League: Man Utd vs. Marseille, All Markets
Cheltenham Festival: National Hunt Challenge (1.30pm), Win and Place Markets, (Ante post bets do not count).
Cheltenham Festival: Jewson Novices Chase (1.30pm), Win and Place Markets, (Ante post bets do not count).
Cheltenham Festival: Triumph Hurdle (1.30pm), Win and Place Markets, (Ante post bets do not count).
Premier League: Man Utd vs. Bolton: All Markets
Cricket World Cup: Australia vs. Pakistan: All Markets
Rugby 6 Nations: Ireland vs. England: All Markets
jimmyfh - as Betfair ties up your risk and profit until a market is settled, this does make a big difference to punters/traders. I dare say less than half the people on a racing market would have a one-bet position. It's not as simple as a person having a staking plan just backing individual horses throughout the day with a bookie.
ReplyDeletecheers Aaron - not sure the Dublin move had anything to do with getting away from customers, purely about reducing tax paid, and getting away from Julie Cooper! :)
ReplyDeletecheers George for that info. I'll rephrase it then - when was the last time they offered it as compensation for their ballsups rather than as a marketing ploy?
ReplyDeleteThose commission-free markets were because of the ballsup when the site went down completely for over five hours at around 2:30 pm on Saturday 12th March.
ReplyDeletethanks George. Memory going in my old age - obviously shows how little I was using Betfair in March for whatever reason.
ReplyDelete